well I would say that having high quality links is important,but the other factor is the amount of traffic a site recieves which I am sure is a major part of googles algo.
There is also the age of the site which I believe to be an important factor ,also the quality of the usefull information a site puts out.
Our Volks site has a PR 2 but heavy traffic so can beat any site with a PR5 or more .
However - if you are asking about PR in terms of improving your SERP's I think you are asking the wrong question, as high toolbar PR is not really relevant to your ranks.
SEO is a matter of good on-site and on-page optimisation coupled with relevant quality backlinks (links that are relevant and on topic are more important than the PR of those links IMO)
Googles 'green bar' page rank system depends on the following
1) Quantity and quality of inbound links - they need to be as relevant to your site as possible.
2) Age of the website - there's no cheating for this one, the older the site, the better the score
3) Content - the relevance of your website text to your keywords - i.e. if your keyword is 'double glazing', google is looking for the word double glazing a certain number of times within the text on your website
Google regularly changes the weighting on each of these factors - content tends to be the biggest one. Google likes articles, blogs etc that are relevant to the site keywords.
Hope that helps clarify things a little in relation to the 'green box' on your toolbar!
From my testing, others sites, the SERPs and from what I have read about the PageRank algo, I believe it is depenant on links, with a small amount of weight for the age of the domain.
Relevence from linking sites seems to have little weight, content can be of poor quality or simply images with no alt tags etc, with no effect on PR, and traffic is not a factor either. I have sites that get a handful of uniques a month and are PR3...maybe at the higher end of the scale these factors are more of an issue...
This is all based on the Green Bar PR Indicator, which is not really a current, accurate measure of the actual Google PR.